Understanding the cultural nuances while doing business in the Philippines

This article is a submission by D&V Philippines. D&V Philippines has years of experience in the accounting and finance industry. This third-party services company can generate the financial reports you need to make real-time financial decisions.

What should you know about doing business in the Philippines?

Doing business in the Philippines works best when you build trust, respect local culture, and take time with relationships.

• Filipinos value personal ties, so small talk comes before deals.
• Communication is often indirect, so a “yes” may need follow-up.
• Hierarchy and saving face shape most meetings and talks.

The Philippines is a prime outsourcing spot. It sits in the Asia Pacific region and offers a skilled workforce.

Filipinos also speak strong English. So they are easy to train and hire because they already know the language. You can find Filipino talent in many fields, such as engineering, IT, marketing, sales, and customer service.

Cultural guide to doing business in the Philippines

Before you set up a business in the Philippines, learn the local culture first.

Doing so helps you build a strong client relationship that lasts. As a result, you gain a real edge over rivals. Filipino traits and values often guide how deals get done.

Developing personal relationships

Your ties with Filipino partners drive your success. So networking is not just about business.

Do not be surprised when a Filipino asks personal questions. For example, they may ask about your family, hobbies, and interests.

You can ask the same in return. In fact, small talk is a key part of building trust. As a result, a warm bond can speed up your talks and earn you favors.

Nuances of gift-giving

In some cultures, a gift can look like a bribe. However, gift-giving is normal business etiquette in the Philippines, at the right times.

For example, you can give a gift early on as you build rapport. Later, a second gift can mark a closed deal and a new partnership. To learn more norms, review these rules of business etiquette.

Indirect communication

Filipinos speak fluent English. Still, you must share your goals clearly. So set them out before any face-to-face meeting.

Also avoid making assumptions at the end of a meeting.

Filipinos rarely say a flat “no” on the spot. So they may agree now, then step back later after review.

They want to avoid conflict and keep face. So after the meeting, follow up on your terms. This gives them time to weigh the pros and cons.

You will know talks worked when you get written confirmation. Then you can move ahead with the details.

Keeping face in negotiations

You must respect the Filipino need to save face during talks. For example, being too pushy for a fast answer creates tension. As a result, it can hurt your chance of getting a deal done.

A “yes” does not always mean yes. So you will need to follow up for the real answer.

Be polite and warm in meetings. Also note that hierarchy is followed closely. So learn who to address and their rank first.

Finally, avoid open conflict with Filipino partners. Friendly banter may even be a sign of avoiding conflict and saving face.

Use connections wisely

Your local contacts shape your access to key decision-makers. In short, someone must vouch for you first.

So you will need a contact to introduce you. Once that link is set, talks can move fast and smoothly.

Building ties with Filipinos takes time. So invest real time and effort to succeed. A grasp of Filipino work culture makes these bonds easier to form.

To be late or not

Filipinos often mention “Filipino time.” This means people may arrive later than the set time.

So give some leeway when you meet Filipinos for the first time. Still, the accepted margin is around 15 minutes.

Understand the hierarchy

Many Philippine businesses are family-owned. So understanding the hierarchy matters when you partner with them.

Family members often hold different roles in the firm. As a result, you will need a shared contact to start talks or get a meeting.

Once you set the initial meeting, you can build the bond. Even for non-family firms, you will still need a link to the decision-makers.

FAQs of doing business in the Philippines

Companies that establish a presence in the Philippines gain many perks. For example, they can cut costs, use resources well, and lift profits.

What are your incentives for doing business in the Philippines?

Now that you know the cultural nuances, note that doing business in the Philippines brings multiple benefits.

For example, consider PEZA accreditation if you plan to set up in the country.

The government set up PEZA in the mid-1990s. So it can now support foreign-owned companies. Once accredited, you gain access to incentives such as:

• Up to seven years of income tax holidays for accredited companies
• VAT exemptions on imports
• Accreditation allows companies to hire foreign employees
• Land lease terms that span decades
• Import-export activities have simplified procedures
• Visa support for foreigners and their dependents

These are just some of the perks. However, you must meet certain requirements to qualify. So partner with an experienced local firm to reduce the problems you may face. You can also compare pay rates with this guide to the average salary in the Philippines.

What activities qualify for PEZA accreditation?

Some activities that can benefit from PEZA include:

• Export manufacturing
• Information technology service exports (e.g., call centers, BPO, software development, programming, and e-commerce)
• Sports and recreation centers and facilities, accommodation, and special interest activities and attractions aimed at foreigners within PEZA Tourism Special Economic Zones
• Department of Health endorsed medical services with foreigners as primary clients/patients
• Utilities that provide power and light and supply and distribute water within special economic zones

Learn more about which activities qualify when you visit this website. You can also read this overview of PEZA incentives, requirements, and locations.

What are the requirements for PEZA accreditation?

You will have to submit these before you get accredited:

• Application form
• By-laws
• Articles of incorporation
• Project feasibility study
• Board resolution authorized company representative and signatory
• Secretary’s certificate that authorizes application for PEZA registration

Why is English proficiency important for doing business in the Philippines?

Strong English makes teamwork and training much easier. So you spend less time on language gaps. As a result, Filipino staff can serve global clients with ease.

How long does it take to build business relationships in the Philippines?

It often takes weeks or months, not days. Filipinos value trust and personal ties. So plan for several meetings before you close a deal.

Key takeaways

• Doing business in the Philippines rests on trust and personal ties.
• Communication is indirect, so always follow up for the real answer.
• Respect hierarchy and help partners save face in meetings.
• PEZA accreditation offers tax holidays and other strong incentives.
• Work with a local expert firm to meet all requirements.